**Exhibit
        10.7**
  **EMPLOYMENT
        AGREEMENT**
  This
        EMPLOYMENT AGREEMENT (“Agreement”), effective July 1, 2006, is entered into by
        and between SYS Technologies, a California corporation, with its principal
        office at 5050 Murphy Canyon Road, Suite 200, San Diego,
        California 92123 (“Company”), and Ken Regan, (“Employee”), collectively the
“Parties.” The Parties hereto desire to enter into an employment arrangement and
        in order to accomplish that purpose and in consideration of the terms, covenants
        and conditions hereinafter set forth, the Parties hereby enter into this
        Agreement.
  **SECTION
        1**
  **EMPLOYMENT;
        TERM; DUTIES**
  1.1  Employment .
        Upon
        the terms and conditions hereinafter set forth, the Company employs Employee,
        and Employee hereby accepts employment, as President & Chief Operating
        Officer, Defense Solutions Group.
  1.2  Term .
        Employee’s employment hereunder shall be for a term (the “Term”) commencing on
        the date this Agreement is effective and ending on June 30, 2008, unless
        the
        Agreement terminates sooner pursuant to Section 4 below; provided, however,
        that
        the Agreement shall renew automatically for successive periods of one (1)
        year
        unless the Company or Employee provides written notice to the other Party
        of a
        desire to change, modify, amend or terminate the Agreement at least thirty
        (30)
        days prior to the then-current expiration date of the Agreement. If the Company
        elects not to renew this Agreement at the conclusion of the Term, Employee
        will
        be eligible for severance benefits pursuant to and in accordance with
        subsections 4.2 or 4.4.
  1.3  Duties .
        During
        the Term, Employee shall perform such duties for the Company as are prescribed
        by applicable job specifications, the Bylaws of the Company and such other
        or
        additional duties, consistent with such Bylaws, as may be assigned to him/her
        from time to time by the Chief Executive Officer (“CEO”), or the Board of
        Directors of the Company. Employee shall devote his/her best efforts, attention
        and energies to the performance of his/her duties hereunder. This employment
        is
        full-time and exclusive. Employee may not work for any other company or
        enterprise during the Term of this Agreement such that such employment would
        conflict or interfere with his/her obligations to the Company under this
        Agreement. Employee must advise the CEO in writing prior to undertaking any
        employment in addition to his/her employment with the Company.
  **SECTION
        2**
  **COMPENSATION**
  2.1  Base
        Salary .
        For all
        services rendered by Employee hereunder and all covenants and conditions
        undertaken by both Parties pursuant to this Agreement, the Company shall
        pay,
        and Employee shall accept, as compensation, an annual base salary (“Base
        Salary”) of Two Hundred and Ten Thousand Dollars ($210,000). This Base Salary
        shall be payable in accordance with the normal payroll practices of Company,
        less required deductions pursuant to state and federal law, and less any
        amounts
        to be deducted pursuant to agreement between the Parties.
  2.2  Incentive
        Compensation .
        The
        Employee shall also be paid such bonuses and/or other compensation as may
        be
        determined from time to time by the CEO, or the Board of Directors as they,
        in
        their sole discretion, may determine based upon the performance of the employee
        and/or of the Company.
  
 2.3  Performance
        and Salary Review .
        Employee's performance will be reviewed periodically, usually on an annual
        basis. Adjustments to salary or other compensation, if any, will be made
        by the
        CEO, or the Board of Directors as is then appropriate.
  **SECTION
        3**
  **BENEFITS/BUSINESS
        EXPENSES**
  3.1  Benefits .
        During
        the Term, Employee shall be entitled to participate in such life, health,
        accident, disability and hospitalization insurance plans, pension plans and
        retirement plans as the Company makes available to the employees of the Company
        as a group.
  3.2  Business
        Expenses .
        Employee will be reimbursed for all reasonable, out-of-pocket business expenses
        incurred in the performance of his/her duties on behalf of Company. To obtain
        reimbursement, expenses must be submitted promptly with appropriate supporting
        documentation in accordance with Company’s policies and procedures.
  **SECTION
        4**
  **TERMINATION;
        RESIGNATION; CHANGE OF CONTROL; DEATH; DISABILITY**
  4.1  Termination
        of Employment With Cause .
        If
        (a) Employee fails to meet the performance standards established for
        his/her position and does not remedy such shortcomings within 30 days after
        written notice from the Company of such failure; or (b) Employee breaches
        any material provision of this Agreement; or (c) Employee has been
        convicted of any felony; or (d) Employee commits any act of fraud,
        misappropriation of funds or embezzlement; or (e) Employee fails to report
        to work for three (3) consecutive business days without informing his/her
        superior; or (f) Employee commits any act, or fails to take any action, the
        effect of which is to bring the Company into disrepute with any of its
        customers, including, but not limited to a material violation of the Company
        Code of Ethics, the Company shall have the right, upon written notice to
        the
        Employee, to immediately terminate his/her employment (“Termination With Cause”)
        hereunder, without any further liability or obligation to him/her hereunder
        or
        otherwise in respect of his/her employment, other than its obligation to
        pay
        unpaid Base Salary and unused personal time accrued as of the date of
        termination.
  4.2  Termination
        of Employment Without Cause .
        Notwithstanding any provision to the contrary herein, the Company may at
        any
        time, in its sole and absolute discretion and for any or no reason, terminate
        the employment of the Employee hereunder; PROVIDED, that if such termination
        is
        not a Termination With Cause, as defined by subsection 4.1, and such
        termination is not caused by the death or Disability of the Employee, the
        Company shall pay and/or provide the Employee as follows:
  4.2.1  All
        accrued but unpaid Base Salary.
  4.2.2  Reimbursement
        of normal incidental employee expenses as of the date of the termination
        as and
        when such amount is due and payable hereunder in accordance with
        subsection 3.2.
  4.2.3  Company
        shall pay twelve (12) severance payments (“Severance Payments”) payable monthly
        to Employee equivalent to one-twelfth (1/12) of the Base Salary in effect
        as of
        the date of such termination (the “Termination Date”) for a period
        of twelve months from the Date of Termination (the “Severance Period”),
        provided that Employee and the Company execute an appropriate mutual general
        release before Employee has any entitlement to the Severance Payments. Company
        will also pay the premiums on the COBRA insurance coverages during the Severance
        Period, provided that Employee qualifies for such coverages and timely elects
        COBRA coverage. The Company may, at its option, pay for and acquire insurance
        which will provide the Severance Payments and such benefits during the Severance
        Period.
  4.2.4  All
        stock
        options issued to Employee or earned but not yet issued prior to the Termination
        Date shall immediately become fully vested.
  4.2.5  Accrued
        but unused personal leave shall be paid out in accordance with legal
        requirements. No personal leave or other benefits shall continue to accrue
        during the Severance Period.
  4.2.6  Notwithstanding
        the foregoing, if any amounts due to Employee pursuant to this Agreement
        are
        determined to be “Parachute Payments” as such term is defined in
        Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
        and the regulations promulgated thereunder, then the total compensation paid
        to
        Employee pursuant to this Agreement, together with any other payment or the
        value of any benefit received or to be received by Employee which is treated
        as
        a Parachute Payment shall not exceed 2.99 times Employee’s Base Amount (as such
        term is defined in Section 280G of the Code). In the event a reduction of
        the payments set forth in this Agreement is required pursuant to this Section,
        Employee may select the compensation which will be reduced in order to fall
        within the 2.99 times Base Amount limitation.
  4.3  Resignation .
  4.3.1  If
        Employee resigns (except as set forth in subsections 4.3.2 or 4.4 below),
        this Agreement shall immediately terminate and the Company shall have no
        further
        liability or obligation to Employee hereunder, including any severance payments,
        or otherwise in respect of his/her employment, other than its obligation
        to pay
        unpaid Base Salary and unused personal leave accrued as of the date of
        resignation.
  4.3.2  Resignation
        with Cause .
        If
        Employee resigns his/her employment because (a) his/her position or duties
        are modified by the Company to such an extent that his/her duties are
        substantially no longer consistent with the position for which he/she was
        employed pursuant to this Agreement, or (b) there has been a material
        breach by the Company of a material term of this Agreement which continues
        uncured following fourteen (14) days after written notice by Employee to
        the
        Company of such breach, then Employee will be entitled to the severance benefits
        set forth in subsection 4.2, consistent with the terms of said
        provision.
  4.4  Change
        In Control .
        In the
        event of a Change in Control (as that term is defined below), Company shall
        immediately take all necessary measures, consistent with the Company’s Stock
        Option Plans, to accelerate the vesting of any unvested options held by the
        Employee under such Plans so that such options will be treated as vested
        options
        during the Change in Control. In addition, employment separation, as provided
        in
        this section, that occurs as a result of a Change in Control shall result
        in
        Severance Payments on the same terms set forth in subsection 4.2 above, except
        that the Severance Period shall be eighteen (18) months. Such Change In Control
        Severance Payments will be made in the event of:
  (a)  Employee’s
        involuntary dismissal or discharge by the Company, other than pursuant to
        subsections 4.1, 4.3.1, or 4.5, or
  (b)  Employee’s
        voluntary resignation, other than pursuant to subsection 4.3, following (i)
        a
        change in his/her position with the Company (or Parent or Subsidiary employing
        Employee) which materially reduces his/her duties and responsibilities or
        the
        level of management to which he/she reports, (ii) a reduction in Employee’s
        level of compensation as of the date of the Change in Control (including
        base
        salary and fringe benefits), or (iii) a relocation of Employee’s place of
        employment by more than fifty (50) miles, provided and only if such change,
        reduction, or relocation is effected by the Company without Employee’s express
        consent.
  4.4.1  For
        purposes of this Agreement, a “Change in Control” shall mean: (i) the
        acquisition, by one person or a group, of stock of the Company that causes
        such
        person or group to own more than 50% of the total fair market value or total
        voting power of the stock of such Company; (ii) either: (1) the
        acquisition, by one person or a group, of ownership of 35% or more of the
        total
        voting power of the stock of the Company; or (2) the replacement of a
        majority of the members of the Board with directors whose appointment or
        election is not endorsed by the existing Board; AND (iii) the acquisition
        of
        assets from the Company that have a total gross fair market value of 40%
        or more
        of the total gross fair market value of all assets of the Company prior to
        the
        acquisition.
  4.5  Termination
        Due to Death or Disability .
        This
        Agreement will immediately terminate upon Employee’s death. This Agreement will
        terminate upon Employee’s Disability (as defined below), when consistent with
        state and federal law. In the event of Employee’s termination due to death or
        Disability, Employee, or Employee’s heirs, personal representatives or estate,
        as the case may be, will be entitled to receive only the standard entitlements
        and those benefits available under any applicable Company plan or insurance
        policy, subject to such plan or policy requirements, along with accrued unpaid
        Base Salary and personal time. All other Company obligations to Employee
        pursuant to this Agreement will become automatically terminated and completely
        extinguished. In addition, neither Employee nor Employee’s heirs, personal
        representatives or estate will be entitled to receive Severance Payments
        or
        other benefits described in subsection 4.2 above.
  4.5.1  For
        the
        purpose of this Agreement only, the Company will not deem this Agreement
        terminated due to Employee’s Disability unless: (i) he or she is unable to
        engage in any substantial gainful activity by reason of any medically
        determinable physical or mental impairment that can be expected to result
        in
        death or can be expected to last for a continuous period of not less than
        12
        months; (ii) he or she is, by reason of any medically determinable physical
        or
        mental impairment that can be expected to result in death or can be expected
        to
        last for a continuous period of not less than 12 months, receiving income
        replacement benefits for a period of not less than three months under an
        accident and health plan covering employees of the Company; or (iii) the
        Employee is determined to be totally disabled by the Social Security
        Administration. For purposes of this Section 4.5.1(i) and (ii), whether Employee
        satisfies the definition of Disabled shall be determined in good faith by
        the
        Board of Directors of the Company.
  4.6  Catch-Up
        Payments for Certain Key Employees .
        The
        Company shall delay any payments required under this Section 4 for six months
        following Employee’s termination if Employee is deemed a “key employee,” as that
        term is defined under Code Section 409A. If payments under Section 4 are
        delayed, then on the day following the end of the six-month period the Company
        shall make a catch-up payment equal to the total amount of such payments
        that
        would have been made during the six-month period but for the application
        of Code
        Section 409A, plus interest calculated at the one-year Treasury Bill
        rate.
  **SECTION
        5**
  **INVENTIONS;
        CONFIDENTIAL/TRADE SECRET INFORMATION; NON-DISCLOSURE; UNFAIR COMPETITION;
        CONFLICT OF INTEREST**
  5.1  Inventions .
        All
        processes, technologies and inventions relating to the business of the Company
        (collectively, “Inventions”), including new contributions, improvements, ideas,
        discoveries, trademarks and trade names, conceived, developed, invented,
        made or
        found by the Employee, alone or with others, during his/her employment by
        the
        Company, whether or not patentable and whether or not conceived, developed,
        invented, made or found on the Company’s time or with the use of the Company’s
        facilities or materials, shall be the property of the Company and shall be
        promptly and fully disclosed by Employee to the Company. The Employee shall
        perform all necessary acts (including, without limitation, executing and
        delivering any confirmatory assignments, documents or instruments requested
        by
        the Company) to assign or otherwise to vest title to any such Inventions
        in the
        Company and to enable the Company, at its expense, to secure and maintain
        domestic and/or foreign patents or any other rights for such Inventions.
        This
        Agreement and this subsection does not apply to an Invention which
        qualifies fully as a nonassignable Invention under Section 2870 of the
        California Labor Code.
  5.2  Confidential/Trade
        Secret Information/Non-Disclosure.
  5.2.1  Confidential/Trade
        Secret Information Defined .
        During
        the course of Employee’s employment, Employee will have access to various
        confidential/trade secret information of the Company. “Confidential/trade secret
        information” is information that is not generally known to the public and, as a
        result, is of economic benefit to the Company in the conduct of its business.
        Employee and the Company agree that the term “confidential/trade secret”
includes but is not limited to all information developed or obtained by the
        Company, including its affiliates, and predecessors, and comprising the
        following items, whether or not such items have been reduced to tangible
        form
        (e.g., physical writing, computer hard drive, disk, tape, etc.): all methods,
        techniques, processes, ideas, research and development, product designs,
        engineering designs, plans, models, production plans, business plans, add-on
        features, trade names, service marks, slogans, forms, pricing structures,
        menus,
        business forms, marketing programs and plans, layouts and designs, financial
        structures, operational methods and tactics, cost information, the identity
        of
        and/or contractual arrangements with suppliers and/or vendors, accounting
        procedures, and any document, record or other information of the Company
        relating to the above. Confidential/trade secret information includes not
        only
        information directly belonging to the Company which existed before the date
        of
        this Agreement, but also information developed by Employee for the Company,
        including its affiliates and its predecessors and/or their employees during
        the
        term of Employee’s employment with the Company. It does not include any
        information which (a) was in the lawful and unrestricted possession of
        Employee prior to its disclosure to Employee by the Company or its affiliates
        or
        predecessors, (b) is or becomes generally available to the public by lawful
        acts other than those of Employee after receiving it, or (c) has been
        received lawfully and in good faith by Employee from a third party who is
        not
        and has never been an employee of the Company or its affiliates or predecessors
        and who did not derive it from the Company or its affiliates or
        predecessors.
  5.2.2  Restriction
        on Use of Confidential/Trade Secret Information .
        Employee agrees that his/her use of confidential/trade secret information
        is
        subject to the following restrictions for an indefinite period of time so
        long
        as the confidential/trade secret information has not become generally known
        to
        the public:
  (a)  Non-Disclosure .
        Employee agrees that he/she will not publish or disclose, or allow to be
        published or disclosed, confidential/trade secret information to any person
        without the prior written authorization of the Company unless pursuant to
        Employee’s job duties to the Company under this Agreement.
  (b)  Non-Removal/Surrender .
        Employee agrees that he/she will not remove any confidential/trade secret
        information from the offices of the Company or the premises of any facility
        in
        which the Company is performing services, except pursuant to his/her duties
        under this Agreement. Employee further agrees that he/she shall surrender
        to the
        Company all documents and materials in his/her possession or control which
        contain confidential/trade secret information and which are the property
        of the
        Company upon the termination of this Agreement, and that he/she shall not
        thereafter retain any copies of any such materials.
  5.2.3  Non-Solicitation
        of Customers/Prohibition Against Unfair Competition .
        Employee agrees that at no time after his/her employment with the Company
        will
        he/she engage in competition with the Company while making any use of the
        Company’s confidential/trade secret information. In addition, Employee agrees
        that, for the duration of the severance payments as provided for in Section
        4.2
        or 4.4, he/she will not directly or indirectly accept or solicit, whether
        as an
        employee, independent contractor or in any other capacity, the business of
        any
        customer of the Company with whom Employee worked or otherwise had access
        to the
        Company’s confidential/trade secret information pertaining to its business with
        that customer during the last two (2) years of his/her employment with the
        Company.
  5.3  Conflict
        of Interest. During Employee’s employment with Company ,
        Employee must not engage in any work, paid or unpaid, that creates an actual
        conflict of interest with Company. Such work shall include, but is not limited
        to, directly or indirectly competing with Company in any way, or acting as
        an
        officer, director, employee, consultant, controlling or 5% stockholder,
        volunteer, lender, or agent of any business enterprise of the same nature
        as, or
        which is in direct competition with the business in which Company is now
        engaged
        or in which Company becomes engaged during Employee’s employment with Company,
        as may be determined by the Board of Directors in its sole discretion. If
        the
        Board of Directors believes such a conflict exists during Employee’s employment,
        the Board of Directors may ask Employee to choose to discontinue the other
        work
        or resign employment with Company. In addition, Employee agrees not to refer
        any
        client or potential client of Company to competitors of Company without
        obtaining the Company’s prior written consent during Employee’s employment. Any
        termination of Employee’s employment due to violation of this subsection is
        considered “With Cause” for the purposes of section 4.1 above.
  5.4  Non-Solicitation
        During Employment .
        Employee shall not during his/her employment interfere with or disrupt or
        attempt to disrupt Employer’s business relationship with its customers or
        suppliers or solicit any of the employees of Employer to leave the employ
        of
        Employer.
  5.5  Non-Solicitation
        of Employees .
        Employee agrees that, for the duration of the severance payments as provided
        for
        in Section 4.2 or 4.4, he/she shall not, directly or indirectly, ask or
        encourage any of the Company’s employees to leave their employment with the
        Company or solicit any of the Company’s employees for employment.
  5.6  Breach
        of Provisions .
        If the
        Employee breaches any of the provisions of this Section 5, or in the event
        that
        any such breach is threatened by the Employee, in addition to and without
        limiting or waiving any other remedies available to the Company at law or
        in
        equity, the Company shall be entitled to immediate injunctive relief in any
        court, domestic or foreign, having the capacity to grant such relief, to
        restrain any such breach or threatened breach and to enforce the provisions
        of
        this section 5. The Employee acknowledges and agrees that there is no adequate
        remedy at law for any such breach or threatened breach and, in the event
        that
        any action or proceeding is brought seeking injunctive relief, the Employee
        shall not use as a defense thereto that there is an adequate remedy at law.
        In
        addition, if the Employee breaches any of the provisions of this section 5,
        any and all Severance Payments and benefit obligations under this Agreement
        or
        otherwise will cease and be extinguished in their entirety and the Company
        will
        have no further obligations in that regard.
  5.7  Reasonable
        Restrictions .
        The
        parties acknowledge that the foregoing restrictions, as well as the duration
        and
        the territorial scope thereof as set forth in this section 5, are under all
        of
        the circumstances reasonable and necessary for the protection of the Company
        and
        its business.
  5.8  Definition .
        For
        purposes of this section 5, the term “Company” shall be deemed to include
        any subsidiary or affiliate of the Company.
  **SECTION
        6**
  **MISCELLANEOUS**
  6.1  Binding
        Effect .
        This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and their respective legal representatives, heirs, distributees, successors
        and
        assigns; PROVIDED, that the rights and obligations of the Employee hereunder
        shall not be assignable by him/her.
  6.2  Notices .
        Any
        notice provided for herein shall be in writing and shall be deemed to have
        been
        given or made (a) when personally delivered or (b) when sent by
        telecopier and confirmed within forty-eight (48) hours by letter mailed or
        delivered to the party to be notified at its or his/hers address set forth
        herein; or three (3) days after being sent by registered or certified mail,
        return receipt requested, (or by equivalent currier with delivery documentation
        such as FEDEX or UPS) to the address of the other party set forth or to such
        other address as may be specified by notice given in accordance with this
        section 6.2:
 If to the Company:
                  SYS Technologies
                    5050
                      Murphy Canyon Road, Suite 200
                    San Diego,
                      CA 92123
                    Tel:
                      (858) 715-5500
                    Fax:
                      (858) 715-5510
                    Attention:
                      Sr. Vice President, Corp. Admin.If to Employee:
                  Name: Ken
                        Regan
                      Address:
                      
                      , CA
                      Tel:(___)
                        ___-____
                      Fax:(___)
                        ___-____
 6.3  Severability .
        If any
        provision of this Agreement, or portion thereof, shall be held invalid or
        unenforceable by a court of competent jurisdiction, such invalidity or
        unenforceability shall attach only to such provision or portion thereof,
        and
        shall not in any manner affect or render invalid or unenforceable any other
        provision of this Agreement or portion thereof, and this Agreement shall
        be
        carried out as if any such invalid or unenforceable provision or portion
        thereof
        were not contained herein. In addition, any such invalid or unenforceable
        provision or portion thereof shall be deemed, without further action on the
        part
        of the parties hereto, modified, amended or limited to the extent necessary
        to
        render the same valid and enforceable.
  6.4  Waiver .
        No
        waiver by a party hereto of a breach or default hereunder by the other party
        shall be considered valid, unless expressed in a writing signed by such first
        party, and no such waiver shall be deemed a waiver of any subsequent breach
        or
        default of the same or any other nature.
  6.5  Entire
        Agreement .
        This
        Agreement sets forth the entire agreement between the Parties with respect
        to
        the subject matter hereof, and supersedes any and all prior agreements between
        the Company and Employee, whether written or oral, relating to any or all
        matters covered by and contained or otherwise dealt with in this Agreement.
        This
        Agreement does not constitute a commitment of the Company with regard to
        Employee’s employment, express or implied, other than to the extent expressly
        provided for herein.
  6.6  Amendment .
        No
        modification, change or amendment of this Agreement or any of its provisions
        shall be valid, unless in writing and signed by the party against whom such
        claimed modification, change or amendment is sought to be enforced.
  6.7  Authority .
        The
        Parties each represent and warrant that it/he or she has the power, authority
        and right to enter into this Agreement and to carry out and perform the terms,
        covenants and conditions hereof.
  6.8  Attorneys’
        Fees .
        The
        Parties shall each be responsible for their own attorneys’ fees.
  6.9  Titles .
        The
        titles of the sections of this Agreement are inserted merely for
        convenience and ease of reference and shall not affect or modify the meaning
        of
        any of the terms, covenants or conditions of this Agreement.
  6.10  Applicable
        Law; Choice of Forum .
        Any
        proceeding between the parties arising out of or relating to this Agreement
        shall be brought in the appropriate forum in San Diego County, California.
        This Agreement, and all of the rights and obligations of the parties in
        connection with the employment relationship established hereby, shall be
        governed by and construed in accordance with the substantive laws of the
        State
        of California without giving effect to principles relating to conflicts of
        law.
  6.11  Arbitration .
  6.11.1  Scope .
        To the
        fullest extent permitted by law, Employee and Company agree to the binding
        arbitration of any and all controversies, claims or disputes between them
        arising out of or in any way related to this Agreement, the employment
        relationship between Company and Employee and any disputes upon termination
        of
        employment, including but not limited to breach of contract, tort,
        discrimination, harassment, wrongful termination, demotion, discipline, failure
        to accommodate, family and medical leave, compensation or benefits claims,
        constitutional claims; and any claims for violation of any local, state or
        federal law, statute, regulation or ordinance or common law. For the purpose
        of
        this agreement to arbitrate, references to “Company” include all parent,
        subsidiary or related entities and their employees, supervisors, officers,
        directors, agents, pension or benefit plans, pension or benefit plan sponsors,
        fiduciaries, administrators, affiliates and all successors and assigns of
        any of
        them, and this agreement to arbitrate shall apply to them to the extent
        Employee’s claims arise out of or relate to their actions on behalf of
        Company.
  6.11.2  Arbitration
        Procedure .
        To
        commence any such arbitration proceeding, the party commencing the arbitration
        must provide the other party with written notice of any and all claims forming
        the basis of such right in sufficient detail to inform the other party of
        the
        substance of such claims. In no event shall this notice for arbitration be
        made
        after the date when institution of legal or equitable proceedings based on
        such
        claims would be barred by the applicable statute of limitations. The arbitration
        will be conducted in San Diego, California, by a single neutral arbitrator
        and in accordance with the then-current rules for resolution of employment
        disputes of the American Arbitration Association (“AAA”). The parties are
        entitled to representation by an attorney or other representative of their
        choosing. The arbitrator shall have the power to enter any award that could
        be
        entered by a judge of the trial court of the State of California, and only
        such
        power, and shall follow the law. The award shall be binding and the Parties
        agree to abide by and perform any award rendered by the arbitrator. The
        arbitrator shall issue the award in writing and therein state the essential
        findings and conclusions on which the award is based. Judgment on the award
        may
        be entered in any court having jurisdiction thereof. Company shall bear the
        costs of the arbitration filing and hearing fees and the cost of the
        arbitrator.
  IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
        day
        and year first above written.
  Dated:
                  October
                    12, 2006
                  
                  /s/
                    Ken ReganName:
                      Ken ReganSYS
                      Technologies, Inc.Dated:
                  October
                    12, 2006
                  
                  By:/s/
                      Rob BabbushName:
                      Rob Babbush
                    Title:Sr.
                      Vice President, Corp. Admin.